Prestige Institute of Management and Research, Indore

(An Autonomous Institution Established in 1994, Accredited with Grade ‘A++’ NAAC (UGC) ISO 9001: 2008 Certified Institute,
AICTE / UGC Approved Programs affiliated to DAVV, Indore)

Session 2021-2023
CORPORATE
RESTRUCTURING

TOPIC :- M & A of

Presented To- Presented By-

CA Chandni Bhagat Asif Patel
Vaishnavi Mishra
Vijay Singh
Yash Rathi
 About PayPal About eBay :-
• PayPal, Inc. is an American company • eBay Inc. is an American multinational e-commerce
operating an online payments system in the company, that facilitates business-to-business and
majority of countries that support online business-to-consumer sales through its website.
• eBay was founded by Pierre Omidyar in 1995.
money transfers, and serves as an electronic
• eBay listed on stock exchange in 1998.
alternative to traditional paper methods such
• 2nd Leading online Marketplace in US as per 2018
as checks and money orders. survey. (19.7% share)
• Paypal was founded by Max Levchin, Peter
Thiel, and Luke Nosek in 1998.
• Paypal listed on stock exchange in 2002.
• Market Leader in online payment industry.
(54.5% share)
 After M&A of Ebay and PayPal
1.
PayPal was also hugely dependent
on the user base of eBay, even
though eBay had its own
competing payment service.
2.
Two-thirds of PayPal users were
derived from eBay.
3.
Subsequent to the acquisition,
eBay’s revenue increased by 83%.
The acquisition proved a success
for both the companies. On an
average PayPal contributed 25%
to the total revenue right after the
acquisition and 44% of total eBay
revenue.
 About M&A of Ebay and PayPal

PayPals Perspective :- eBay’s Perspective :-

• Fair Price for the Acquisition • Its online payment service – As Billpoint didn’t work
• An Opportunity to increase the market reach and • Improve user experience
improve its service • Cost Efficient
• PayPal identified eBay as its user base since at
that time there was no standard payment service
on eBay.
• Additionally, 70% of eBay users accepted
PayPal as a mode of payment and only 30%
opted for Billpoint.

In 2002, eBay decides to acquire the PayPal through its IPO with shares worth 1.5 billion
 If PayPal and Ebay was successful
marriage then what led to divorce?

In 2014, The reason behind the merger of the two entities was survival and this also caused the
spin-off.

1. 2.

PayPal has other business plans
for diversification in the physical
market. The company was facing
challenges from other payment
firms.
Both eBay and PayPal were facing
stiff competition but this was in
different segments and distinct
markets, ironically one was
growing at a very high rate and the
other virtually saw a stagnant
growth.
 After Spin-off

The spin-off normally sounds unpleasant, but eBay–PayPal spin-off did not fall in this category.

1. 2. 3.

eBay and PayPal separated at the

The eBay segment was more
profitable to the company prior to
the separation of PayPal.
Subsequent to the spin-off, PayPal
right time. The spin-off was the
is doing well. It acquired few
need of the hour for the high
start-up companies; Swift
growth e-commerce business
Financials, TIO Networks and
pertaining to extreme competition.
Xoom Corporation to enter new
PayPal has always believed in
markets.
innovations and a continued
association with eBay would have
made this difficult.
 Conclusion

The spin-off normally sounds unpleasant, but eBay–PayPal spin-off did not fall in this category.

Short Term Long term

• Its better for both eBay and PayPal to split into two separate
• It’s a win-win acquisition, as eBay was able to
companies. It is no longer makes economic sense for eBay
improve its online payment transaction and
and PayPal to be tied together.
PayPal was able to grow its customer base from
• As Split-off helps both the business to grow faster in their
eBay.
own market.